Well, that was quick: While most of the analysts were busy explaining why the departes won’t shake the May government, Foreign Secretary Boris Johnson also resigned, accusing May of killing Brexit and negotiating under ’white flags’ with the EU. He was quickly replaced by Jeremy Hunt – a loyal May supporter – , but by now all top jobs are held by politicians who opposed Brexit, which probably won’t fly well with voters. (According to the latest polls, only 22% of Britons think May is handling Brexit well, and her latest tactical play, to survive this crisis using Labour votes, is further infuriating her base. ) The EU, of course, is quite happy, Donald Tusk even hinted that Brexit can now be reversed. If May is forced to resign, or U-turns, the possibility is there, but she is alienating right-leaning voters with such a speed (similarly to Merkel) that hard-Brexiters can jump to the top just well. That’s why GBP traders weren’t as pleased as Brussels (the GBP moderately weakened further, to 1.3230 per Dollar).

Otherwise, markets happily traded higher (SPX +0.88%, DAX +0.38%, Nikkei +0.96%, Shanghai -0.10%), in an original way to collapse on Trump’s trade tariffs, and oil prices advanced to near their recent highs (WTI 74.40, Brent 78.70 USD), after several widely followed strategists and even OPEC speakers questioned whether Saudi Arabia can offset the disappearing oil supply in case the US succeeds in reducing Iran’s crude exports to zero, as stated. (According to the calculations of John Kemp, this offset is physically possible – we are talking about 2 million barrels per day -, but the Saudis would need to raise their production to unprecedented levels as their crude stocks are currently at the lowest level since 2011. That also begs the question how flexible exactly shale producers are – they somehow disappeared from the newsflow entirely – and what will happen if such a tight market is suddenly hit by a real geopolitical crisis. My personal view remains that oil prices above from here hurt interests, especially Trump’s plans for the mid-term elections in November.)

In another bizarre turn of events, Merkel praised China for opening up to foreign investment and becoming an ally in her defence of a rule-based global system (does this sound bad only to me?), and bragged about the latest projects of the Germany-China economic engine, namely the construction of a 10 billion USD BASF chemical complex in China and the building of a massive electric car battery factory in Thuringia by the Chinese (Contemporary Amperex Technology). Judging from the German car shares, investors didn’t internalize the inspiration (Volkswagen -1% or -30% since 2014, Daimler -0.65% or -20%), and still care more about the US tariff threat.